Lindahl vs. Lindahl: Optimal siting and sizing of a noxious facility
Authors
Ferraz, Eduardo
Mantilla, César
Editor
Publication date
2020-09-22
Document language
eng
Publisher
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Journal Title
Journal ISSN
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Abstract
Providing a noxious facility poses two problems previously unexplored together: where to locate it and how large it should be. We propose a mechanism combining some market-like properties with a modified second-price auction. The mechanism selects a host, a facility size, a compensation for hosting the project, and determines how the compensation and building costs are split among the non-hosts. Regardless of the selected host, any equilibrium outcome of this mechanism is a Lindahl allocation. If each community bids truthfully for becoming the host-a strategy which no community has incentives to deviate-the selected Lindahl allocation is globally optimal.
Description
Códigos JEL
D61 - Allocative Efficiency; Cost-Benefit Analysis, H40 - Publicly Provided Goods: General, R53 - Public Facility Location Analysis; Public Investment and Capital Stock
item.page.subjectjelspa
Keywords
NIMBY, LULU, Lindahl outcomes, Public projects, Mechanism design
